March 25, 2008

More Endowment Scrutiny Likely, Former Senate Aide Says

Unless wealthy colleges start spending more of their endowment assets on student aid, they can expect more scrutiny from the federal government, a former Senate staff member said today.

Dean A. Zerbe, who recently resigned as senior counsel to Sen. Charles E. Grassley, said in an online discussion with The Chronicle of Philanthropy that members of Congress remain interested in discussing a mandatory payout requirement for college endowments that have more than $500-million in assets.

But whether lawmakers pursue legislation to enact such a change will “depend to a certain extent on the voluntary response by the colleges,” said Mr. Zerbe, who is now national managing director of Alliantgroup, a Houston-based tax-consulting company.

Senator Grassley, of Iowa, is the top Republican on the Senate Finance Committee. In January he and Montana Sen. Max Baucus, the committee’s top Democrat, sent letters to 136 wealthy colleges requesting information about their endowment spending, financial-aid policies, and tuition increases over the past decade.

Colleges have been responding to the committee’s request over the past few weeks. Some lobbyists expect the Finance Committee to hold a hearing on endowment spending practices this spring. —Brad Wolverton

Comments

1. This election year, through their usual careful planning and management, Democrats have already found ways to alienate feminists and the black community, two of their strongest constituencies. Are they really going to fight with yet-another traditional Democratic group — higher education — or do they just hope to win a cheap victory by intimidating administrators into giving endowment funds to potential Democratic voters?

   If evil Republican politicians tried to tell us how to spend our money, the screams about academic independence and freedom would wake the dead. What difference does it make which Big Brother or third cousin twice-removed is at the door?

   But I could have this all wrong. Perhaps courageous college leaders will rally their campuses by arguing against oppressive government interference and reminding their constituencies of the value of controlling their own destinies. Also, maybe the U. S. Olympic Committee will finally call and beg me to run the 100 meters in Beijing. By God, I’d do it!

   — S. Britchky    Mar 26, 03:40 AM    #

2. If such an asinine requirement is enacted, large endowments should be determined based on the value of the endowment PER STUDENT. A State University with 30,000 students and a $500 million endowment does not have a large endowmnent. That is less than $17,000 per student. Compare that to Harvard or Yale on a per student basis before you make that state U subject to MORE arduous administrative reporting, etc. Thus driving the cost of education up even higher.

   — John    Mar 26, 08:52 AM    #

3. As for this particular policy project, I have no
   dog in the hunt. But I am
   amazed that S. Britchky’s entry castigates the Democrats when the article itself centers upon the interest of Republican Sen. Grassley in pressuring wealthy schools to do this.

   Yesterday I saw a car with a bumper sticker reading “Don’t Blame Me. I voted Republican.” When are Republicans going to quit finger-pointing or start pointing fingers at themselves?

   — Dave    Mar 26, 08:55 AM    #

4. My thought exactly. Baccus, the Democrat (MT) in with Grassley on the original data request regarding endowment spending, withdrew his support for the idea of legislation and mandatory spending levels. Right now at least, this has become pure triple-R: right-red-republican. But I would not count on it staying that way. The Dems. are not well-disposed to higher Ed. when it comes to the issues of price and cost. Grassley can find another D co-sponsor if he wants to try to drive this idea further. And this is then to the point of comment #1. Yes, I think they (Dems) will indeed be quite willing to pick a real fight over the costs and pricing of higher ed. Even Obama mentions it in every one of his stump speeches.

   — David    Mar 26, 11:23 AM    #

5. State college receive billion dollar subsidies on an annual basis from legislatures that their private cousins don’t. Comparing Harvard and Yale to a state university is apples vs oranges.

   — Jayte    Mar 26, 03:23 PM    #

6. I agree that the focus should be on dollars per student, but even that does not go far enough. Some programs are much more dollar-intensive than others. A 10,000-student university with a $500M endowment and a medical school is not in the same position as an equally large, equally endowed university without one. (Other types of programs also generally require more endowment than most.)

   The cost of doing business in the schools’ lacales should also be taken into account. A university in Manhattan, for example, gets less bang for its buck than one in the suburbs.

   — CU Alum    Mar 26, 07:45 PM    #

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